Mergers and Acquisitions have emerged as a natural process of business restructuring throughout the world. In India, the early mergers and acquisitions were arranged either by government agencies or by financial institutions within the framework of a regulated regime. However, since 1991, Indian industries have been increasingly exposed to both domestic and international competition. This has forced the Indian corporate sector to restructure and reengineer to be competitive. Mergers and Acquisitions have been resorted to by many companies as a strategic choice to restructure their businesses. India in recent times has taken big leaps in the field of Mergers and Acquisitions and the aggression of Indian firms going for M&As have been quite noticeable. The objective of the summit is to analyze and understand the trends of mergers and acquisitions across different sectors of Indian Industries and to examine the impact of mergers and acquisitions on both the performance of companies and the economy-what effect it has on share price behaviour and shareholder wealth. The summit also aims to bring out various post M&A integration aspects that companies face after a successful M&A deal.

Newspapers are abuzz with speculation. India is emerging a vibrant player in the world of mergers and acquisitions (M&A). Not long ago, Mr Lakshmi Mittal acquired Arcelor, and with Tata Steel’s bid for the Corus group having gone through, Tata Steel has become the world’s fifth largest producer of steel. Tata Group companies and many other companies in the information technology, pharmaceutical and banking sectors have made a host of other acquisitions. Could anybody have imagined such a showing by Indian entrepreneurs even a few years ago?

In many areas, India is slowly but surely emerging at the top. A leader in Information Technology, India was designated the third most attractive research and development centre in the world by UNCTAD (United Nations Conference on Trade and Development) in its World Investment Report (WIR), 2005. India is also the biggest foreign investor in the UK, outpacing even the US.

There has been a spurt in overseas investments by India. From $0.7 billion in 2000-01, the overseas investments had risen to $2.7 billion in 2005-06 before soaring to $11 billion in 2006-07 with the Tata’s Corus buy being successfully through. The industries that attracted Indian investments included metal, energy, pharmaceutical, IT and banking. But why has this age of M&As come about?

There has been the emergence of developing and transition nations called by experts now as the emerging’ investors. In 1990, only six developing and transition countries had made any outward investment. In 2005, the number had increased to 25. Between 1987 and 2005, the share of global M&As by MNCs from developing and transition countries had risen from 4 per cent to 13 per cent in value terms, and their share in Greenfield and expansion projects exceeded 15 per cent in 2005.The last three years have seen even more aggressive growth by these emerging investors of which India and China form the leading players. Interestingly, India and China despite being the major players are not really competitors as in the case of inbound foreign direct investment due to different objectives and estimations. Though India’s public sector took the lead in investing abroad, especially looking for oil assets, the private sector is now going full speed ahead, driving overseas investments. In China, state enterprises and the public sector have been the principal investors. However, a major share of China’s private overseas investment, estimated at 15-20 per cent, is tied with “round tripping” funds, flowing from tax havens such as Hong Kong, the Cayman Islands and the Virgin Islands — the three largest destinations for outward investments. From this perspective, India’s outbound investment is more accountable in global FDI outflow than China’s. India’s primary motive is to increase market penetration while China’s aim is to bolster its domestic industries.

Eyebrows have been raised over the rapid growth in India’s investments abroad, but that should be no reason to curb them as the benefits they bring to domestic industry are many and significant.

The most important benefit that India derives from this is increase in  competitiveness. This has also definitely strengthened the arms of local companies and of the MNCs to survive in a competitive environment. Therefore, the more the domestic industries invest abroad, the more the benefits to the home economy. What remains to be seen is how sustainable these benefits areto the economy as a whole. The writing is clear on the wall-India Inc is definitely on the prowl, the big question is- Is this the beginning of a revolution?